U.S. loses AAA credit rating, downgraded from S&P - News and Current Events | futures io social day trading
futures io futures trading


U.S. loses AAA credit rating, downgraded from S&P
Updated: Views / Replies:3,068 / 39
Created: by kbit Attachments:1

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors – all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you don’t need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 1  
 
Thread Tools Search this Thread
 

U.S. loses AAA credit rating, downgraded from S&P

  #21 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,240 since Jun 2009
Thanks: 29,355 given, 83,237 received

I would still like to know --- those securities which are mandated to be in AAA-rated holdings, how is this calculated? Can the issuer just pick one of the three agencies and say, welp, S&P is at AA so we have to sell everything and move it to a different security? Or can they say, welp, Fitch and Moody's are at AAA so we'll just keep it here even though S&P says it's AA?

Is it an average or a majority? Or can they just decide who to look at and who to ignore?

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote
 
  #22 (permalink)
Membership Revoked
Oslo, Norway
 
Futures Experience: Advanced
Platform: CQG, Excel
Favorite Futures: CL
 
Lornz's Avatar
 
Posts: 1,198 since Apr 2010
Thanks: 500 given, 1,235 received

Funny, I was thinking the same thing... It wouldn't surprise me if they suddenly announced a "gross miscalculation" and changed the rating back. But as they went to the step of actually proceeding with the downgrade, I would hope they have the backbone to defend their decision...

As for the good of the minority vs the majority, it will be interesting to see how extensive the civil unrest will become (if it comes to that)...

One thing's for certain, there are huge difficulties ahead. And no one wants to take the steps required to contain the problem...

Reply With Quote
 
  #23 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,730 since Jul 2011
Thanks: 794 given, 4,779 received



Quoting 
Marc Pado, Cantor Fitzgerald market strategist, said it may be that stocks will take the news better than some might expect because the market has been reacting to the potential downgrade by one or more notches for the past two weeks.

"Asia's going to open first, and Europe second. There might be more angst in trading there before our markets open. But after the first hour, I think we'll shake it off," he said. "If they were going to take it down more than one notch, we would have a bigger reaction of three to five percent in the market."

Link

Reply With Quote
 
  #24 (permalink)
Membership Revoked
Oslo, Norway
 
Futures Experience: Advanced
Platform: CQG, Excel
Favorite Futures: CL
 
Lornz's Avatar
 
Posts: 1,198 since Apr 2010
Thanks: 500 given, 1,235 received


Big Mike View Post
I would still like to know --- those securities which are mandated to be in AAA-rated holdings, how is this calculated? Can the issuer just pick one of the three agencies and say, welp, S&P is at AA so we have to sell everything and move it to a different security? Or can they say, welp, Fitch and Moody's are at AAA so we'll just keep it here even though S&P says it's AA?

Is it an average or a majority? Or can they just decide who to look at and who to ignore?

Mike

I am also quite curious about that, I am not sure how it works in practice...

Reply With Quote
 
  #25 (permalink)
Elite Member
Aurora, Il USA
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
 
kbit's Avatar
 
Posts: 5,872 since Nov 2010
Thanks: 3,301 given, 3,332 received


Big Mike View Post
I would still like to know --- those securities which are mandated to be in AAA-rated holdings, how is this calculated? Can the issuer just pick one of the three agencies and say, welp, S&P is at AA so we have to sell everything and move it to a different security? Or can they say, welp, Fitch and Moody's are at AAA so we'll just keep it here even though S&P says it's AA?

Is it an average or a majority? Or can they just decide who to look at and who to ignore?

Mike

Don't really know the answer myself but I did see an interview with Barney Frank (take it for what it's worth) and he said that "they" go with the highest rating out there. He pretty much says that it doesn't matter(that S&P downgrades) because the other agencies still have the higher rating. Wether this is the way it is or not remains to be seen for variuos reasons like that it was S&P that did the downgrade

Edit: Let me clarify, at the time of the interview Barney didn't mention any specific ratings agency...and my point is that since S&P is the big dog and what they say may have more weight in regards to nation ratings

Reply With Quote
 
  #26 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,730 since Jul 2011
Thanks: 794 given, 4,779 received


Lornz View Post
But as they went to the step of actually proceeding with the downgrade, I would hope they have the backbone to defend their decision...

They did defend giving Lehmans an A rating 3 months before Lehmans declared bankruptcy.


Quoting 
"In our view, Lehman had a strong franchise across its core investment banking, trading, and investment management business," S&P stated. "It had adequate liquidity relative to reasonably severe and foreseeable temporary stresses."

Link

Reply With Quote
 
  #27 (permalink)
Membership Revoked
Oslo, Norway
 
Futures Experience: Advanced
Platform: CQG, Excel
Favorite Futures: CL
 
Lornz's Avatar
 
Posts: 1,198 since Apr 2010
Thanks: 500 given, 1,235 received


ron99 View Post
They did defend giving Lehmans an A rating 3 months before Lehmans declared bankruptcy.


Link

What? You disagree with their decision and reasoning?

Lehman is an interesting case, though. Their competitors wanted them gone, and this was a good opportunity. GS and HSBC apparently did the most damage... Some people made a lot of money that collapse and the aftermath...

Reply With Quote
 
  #28 (permalink)
Elite Member
La Jolla, CA
 
Futures Experience: Master
Platform: Sierra Chart, X_Trader Pro, OptionsCity
Broker/Data: Advantage, Trading Technologies, OptionsCity, IQ Feed
Favorite Futures: CL, NG
 
Private Banker's Avatar
 
Posts: 1,040 since Jul 2010
Thanks: 1,713 given, 3,759 received


Big Mike View Post
I would still like to know --- those securities which are mandated to be in AAA-rated holdings, how is this calculated? Can the issuer just pick one of the three agencies and say, welp, S&P is at AA so we have to sell everything and move it to a different security? Or can they say, welp, Fitch and Moody's are at AAA so we'll just keep it here even though S&P says it's AA?

Is it an average or a majority? Or can they just decide who to look at and who to ignore?

Mike

From what I've seen, most institutions have the specific agencies listed within their investment policy statement and I've seen S&P listed in quite a few of them. But the changes won't happen overnight I'm guessing. This will most likely take a decision by the trustee's, board of directors, etc. to make the adjustments. But given this has never happened before, we could see a knee-jerk reaction.

Also, from what I've read, the Fed has not changed it's capital requirements for banks because of this downgrade. This tells me that we could see some serious problems as the Fed inherently does the wrong thing in most cases. Additionally, we need to see what other countries do now that this has happened. They could easily ignore the Fed and change their capital requirements and cause a tail spin. In fact, that is what I expect to see as the playing field just got a little more level.

Reply With Quote
The following 3 users say Thank You to Private Banker for this post:
 
  #29 (permalink)
Elite Member
UK
 
Futures Experience: None
Platform: -
 
Posts: 155 since Aug 2010
Thanks: 12 given, 74 received

I think you guys are missing the wood for the trees.

The short term implications, such as what bond funds required to hold AAA paper will do, is done and dusted. For too long has the possibility of a downgrade been on the table for long enough for institutions and regulators to either prepare for adapting / exempting AAA mandates. And, in all honestly, it isn't the bond funds that are the immediate problem - it's the money market funds that pose the nearest threat. Still, come Monday morning I don't think the wheels are going to fall off the SP500 (if anything, corporates become more attractive), and the US bond market is the deepest in the world - all $700 trillion of it - and so, frankly, there isn't anywhere else to put your money anyway.

The importance of the downgrade is how it will be played out in the 2012 election; in their report, S&P make it plain that the deficit problems that are blossoming now were planted many years ago, and that the shambles of the past month has cemented the rating as confidence in bipartisan relationships has crumbled...

"The political brinksmanship of recent months highlights what we see as
America's governance and policymaking becoming less stable, less effective,
and less predictable than what we previously believed. The statutory debt
ceiling and the threat of default have become political bargaining chips in
the debate over fiscal policy."

I posted the actual report in the elite section, but so far no-one seems to give a shit what S&P actually say, just make guesses on where the spoos will open...


Reply With Quote
 
  #30 (permalink)
Elite Member
La Jolla, CA
 
Futures Experience: Master
Platform: Sierra Chart, X_Trader Pro, OptionsCity
Broker/Data: Advantage, Trading Technologies, OptionsCity, IQ Feed
Favorite Futures: CL, NG
 
Private Banker's Avatar
 
Posts: 1,040 since Jul 2010
Thanks: 1,713 given, 3,759 received



cpi65 View Post
I think you guys are missing the wood for the trees.

The short term implications, such as what bond funds required to hold AAA paper will do, is done and dusted. For too long has the possibility of a downgrade been on the table for long enough for institutions and regulators to either prepare for adapting / exempting AAA mandates. And, in all honestly, it isn't the bond funds that are the immediate problem - it's the money market funds that pose the nearest threat. Still, come Monday morning I don't think the wheels are going to fall off the SP500 (if anything, corporates become more attractive), and the US bond market is the deepest in the world - all $700 trillion of it - and so, frankly, there isn't anywhere else to put your money anyway.

The importance of the downgrade is how it will be played out in the 2012 election; in their report, S&P make it plain that the deficit problems that are blossoming now were planted many years ago, and that the shambles of the past month has cemented the rating as confidence in bipartisan relationships has crumbled...

"The political brinksmanship of recent months highlights what we see as
America's governance and policymaking becoming less stable, less effective,
and less predictable than what we previously believed. The statutory debt
ceiling and the threat of default have become political bargaining chips in
the debate over fiscal policy."

I posted the actual report in the elite section, but so far no-one seems to give a shit what S&P actually say, just make guesses on where the spoos will open...


I would agree with your thoughts on money market funds. There is the potential for a breaking of the buck. But Bond Funds are only a slice of the US treasury ownership pie that this downgrade affects. There are huge pension funds, endowment funds, sovereign funds, bank holdings for collateral that has potentially created an adverse/material event that can have a knee-jerk scramble to rebalance their positions to other AAA rated securities. As mentioned before, the question is which agencies will these institutions lean more on? From being in the investment management business my entire career, I can assure you that I've seen a majority of these entities place a high emphasis on the S&P's ratings. That is why this is huge.

I think everyone cares about what the S&P has to say. Doesn't mean everyone needs to comment on it though. As for what the market opens at, who cares. Just trade what you see on your screen...

Reply With Quote

Reply



futures io > > > > U.S. loses AAA credit rating, downgraded from S&P

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
S&P warns it may downgrade US credit rating kbit News and Current Events 1 July 15th, 2011 02:43 PM
Moody's Puts U.S. AAA Credit Rating On Review kbit News and Current Events 0 July 13th, 2011 08:42 PM
Moody's Just Threatened To Slash The US Credit Rating kbit News and Current Events 0 June 2nd, 2011 06:09 PM
Cyprus Rating Downgraded Due to Greek Exposure Quick Summary News and Current Events 0 May 31st, 2011 06:10 AM
S&P Affirms US AAA Rating, Cuts Outlook to Negative Quick Summary News and Current Events 0 April 18th, 2011 10:30 AM


All times are GMT -4. The time now is 11:29 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-17 in 0.15 seconds with 20 queries on phoenix via your IP 54.221.73.186